Clinton Favors Test Based on Need in Affirmative Action : Civil rights: President says federal programs, where possible, should use economic rather than racial standards. He hints at policy shift but avoids specifics.

President Clinton declared Friday that he wants to base federal affirmative action programs on economic need rather than race “where we can” and hinted that his pending review of affirmative action programs may lead away from current programs that give preference to minority business people.

Giving new clues of his intended approach on the divisive issue, Clinton told a news conference that programs based on economic need “work better, have a bigger impact and generate broader support.” And he said that it is hard to discern whether the many federal programs that set aside a share of business for minorities or women “even do what they were supposed to do in the first place.”

Insisting that he opposes “quotas and guaranteed goals,” Clinton said his Administration’s most valuable programs for minorities have been those aimed generally at the needy--such as the Head Start and college loan programs and the tax credit for lower-income working families.

But while Clinton said he is almost finished with the review, he carefully dodged other specifics on an issue that has pinned him in an ideological cross-fire between the GOP and the Democratic faithful.

In a separate signal of the Administration’s changing approach, the Justice Department announced Friday that it has sued Illinois State University, charging that the university had turned away white men from a janitor-training program because of their race.

At a 45-minute news conference, Clinton also:

* Accused Senate Majority Leader Bob Dole (R-Kan.) of choosing to lose the balanced-budget amendment in the Senate so Republicans can accuse Democrats of blocking it.

* Complained that the Ethics in Government Act makes it too easy to start investigations of high officials by independent counsels and said that “we really have to ask ourselves whether we are creating a climate here in which a lot of people will be reluctant to serve.”

Clinton and four current or former members of his Administration are under investigation by independent counsels or are subjects of preliminary inquiries that could lead to appointment of outside prosecutors.

* Challenged the Republican-led Congress to produce a “disciplined budget that brings the deficit down” but ducked the question of whether Social Security funds should be counted as part of the federal budget to reduce the deficit.

* Rejected Gov. Pete Wilson’s criticism of Operation Gatekeeper, a federal program intended to stop the flow of illegal immigrants at the Mexican border, saying that problems in the Mexican economy are to blame for recent increases in illegal immigration across the Mexican border.

* Said he is reluctant to send U.S. troops to Croatia to help protect the withdrawal of United Nations troops.

The White House’s study of the 168 federal affirmative action programs was announced last week, at a time of rising public criticism of programs that base government preferences on race and sex. The review has left Clinton with the excruciating political problem of finding a way to oppose the perceived unfairness of some aspects of the system, while standing firmly behind its goal of expanding opportunity.

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Clinton’s nod in the direction of need-based programs is in keeping with a growing body of opinion that the government should aim special breaks toward the poor, rather than toward minorities, who in some cases may be well-off. “Where we can move ahead based on need, we ought to move forward,” Clinton said.

Yet the political value of that approach is clearly limited, since many analysts--and most civil rights leaders--believe that government-induced preferences to the poor in schooling and employment would not sufficiently increase minority representation at good colleges and in better-paying jobs.

At his press conference, Clinton was asked how he could continue to support “set-aside” programs that order a specified share of contracts reserved for minorities, since those rules seem to be the kind of “guaranteed results” Clinton opposes.

“I want to look at how they’re implemented,” Clinton replied. “For one thing, if you look at the rules and what they mean, it’s difficult to draw a conclusion about whether they even do what they were supposed to do in the first place.”

“Set-aside” refers to situations where the government allots a percentage of contracts or other business to minorities or women. The government also allows tax breaks to encourage minority ownership of broadcast companies.

The President acknowledged that he had “always practiced” affirmative action, but stressed that his efforts had recognized merit as well as gender and ethnic diversity. He said that while he had been “regularly and roundly attacked” for adding women and minorities to the federal bench, his selections have had the highest American Bar Assn. ratings of the last three presidents.

As he did last week, Clinton again praised the affirmative action work of the armed services. “I have practiced affirmative action here the way I perceive the United States military has practiced it,” he said.

White House Counsel Abner J. Mikva sketched out in an interview later Friday some broad principles of the approach that the White House is following as it considers ways to modify affirmative action.

He said that Title VII of the Civil Rights Act of 1964 provides that, to compensate workers who have been discriminated against in promotions, judges can award them higher pay. This remedy encourages employers to move discrimination victims up to more responsible jobs, while not displacing employees who were promoted originally, he said.

Mikva also cited the controversial pending case in which the entertainment giant Viacom and a minority broadcaster stand to make millions of dollars in tax breaks and profits through transfer of broadcast licenses.

“I think you have to say, isn’t there some better way of getting minority broadcasters into the field without those kinds of very dramatic, expensive remedies?” asked Mikva, who was formerly a member of the U.S. Circuit Court of Appeals for the District of Columbia.

Mikva said that the review “does not suggest a change from the principal of equality or fairness of treatment, or resistance to racial or gender discrimination.” The issue, he said, is “how do we structure the procedures so they can’t be perceived as unfair.”

On other issues at his press conference, Clinton defended aid to Russian President Boris N. Yeltsin, saying a close relationship with Moscow “on balance . . . is in the interest of the United States,” despite disagreements on several issues.

Clinton expressed some sympathy for Yeltsin’s dilemma in Chechnya, the rebellious province where the Russian army has been attacking civilians as part of a campaign to subdue a drive for local independence.

“I think it’s obviously a very difficult problem for him,” Clinton said. “And so the ambivalence between the military solution and the political solution and the fact that you obviously have 1.2 million or however many there are of very determined people in Chechnya with a decades-long history of resentment against the central government makes this thing just sort of hanging there--you know, it’s like a thorn in their flesh.”

Clinton said he is reluctant to send U.S. troops to help withdraw United Nations forces from Croatia, but may find it necessary to do so if the Croatian government insists on the peacekeepers’ departure.

“We feel a strong responsibility . . . to try to help them and we are trying to work through whatever plans would be appropriate to give that sort of assistance,” he said. “But I have worked very hard to avoid the long-term commitment of American ground troops in that region and I will continue to do that.”

The President praised Mexican President Ernesto Zedillo, saying: “I believe that he’s moving in the right direction and Mexico plainly has moved toward more democracy, more openness and more market economics.”

On Operation Gatekeeper, Clinton said: “My answer to Gov. Wilson is the problem got bigger during the last five months because of the problems in Mexico, but we have made a difference. . . . It’s a lot more than was done before I got here by the previous Administration.”

Clinton gave a preview of the themes of his reelection campaign, saying he is a centrist New Democrat who stands midway between old-style tax-and-spend Democrats and budget-slashing Republicans and emphasizing that the nation’s economy has done well during his Administration.

“The old Washington view, I think it’s fair to say, is that the federal government could provide solutions to America’s problems,” he said. “The Republican contract view reflects in many cases an outright hostility to governmental action, although in some cases a curious willingness to increase the federal government’s control over our daily lives.

“My view, what has loosely been called the New Democratic view . . . is to be skeptical of government but to recognize that it has a role in our lives and a partnership role to play.”